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im no expert on these things. i wish i was. so i start a thread to learn from.

as i see it, house prices have been increasing at an absolutely ridiculous rate over recent years

and people say that that is going to end.

does this mean that house prices will drop, or just stay the same?

and if house prices stop going up fast, does this mean that more people will be buying houses that they actually want to live in for the rest of their lives, rather than just buying as an investment that they can shift on when they feel like it?

property prices generally fluctuated nationally whereas right now it's very much dependent on where you live. For example I work with a bloke who lives in Benfleet in Essex who cannot shift his house at all despite 2 price decreases. On the other hand where I live in East Dulwich property is on the market and under offer within a week or 2 at the most. No easy answer to your question really, strange times! Although a 'crash' as such is wishful thinking.

If house prices begin to slow (like they have the previous two months) it affects confidence. Currently this period of boom can be linked to buyers' confidence. This could quite easily flip and confidence becomes skepticism. Buyers begin to become anxious that their investment isn't producing capital gains.

The IMF has reported that our housing market is over-valued by 40%, which is far greater than their analysis of America pre-sub-prime mortgage 'correction'.

The omens are there.

If house price increases begin to slow then it becomes a less viable investment prospect, meaning money could move around the economy to more productive investment mechanisms. The saying 'Safe as houses' exists for a reason though...

then as reality takes more of a hold they will start to drop, but this will depend on the type of housing, they will not drop all evenly.

It is interesting to speculate what will happen to all those people who already had enough money to 'buy to let.....and leave unlet' because they were hoping to sell again in the future at a vast profit (more than if they had been recieving rent).....there are a suprising large niumnber of appartments like this I dont know about theses propertyy owners situations or demographics or mindsets, so this is also a large variable (and one that has 'pulled up' the scarcity and prices of rhe swankier appartments.

I would have thought given how much money and capital is tied up in real estate, a crash in house prices would effect other areas of the economy detrimentally, leading to something of a general crash, so in relative terms housing wouldn't become cheaper. Can someone please tell me if I'm right or wrong an explain why.

would mean that the people that have also borrowed credit (because their homes value appeared to indicate that they were richer than they actually are) would mean that the repayments for loans and mortgages would increase.

To cover the shortfall from the inability by some to pay (exacerbated by increasing costs of living....food transport, burden to pay for procrastinated polluting/carbon emissions) will mean the banks will try even harder to squeeze their customers........this could spiral with increased unemployment (of reasonable wages) there would still be rock bottom wage jobs.

As the amount to spend changes the (Now few and undiversified) supermarkets and food outlets will be under threat....they will want to try to keep up their profits so will close down many of their unprofitable stores, meaning that certain communities may find that suddenly there is nowhere local to buy food (apart from a few meagre small marts who will have a brief field day)

But thats waht all you guys want eh......market forces to prevail.

Social planning and engineering is evil isnt it?

far better let people suffer because you think money should dictate everything eh?

basically f**king disaster could result.

This is because of lack of diversity in
a) food outlets
b) food suppliers (all geared up to supply a)
c) no attempt to become self sufficient if transportation from abroad becomes untenable
d) no other system of bartering if the cash machines went on the blink
e) no method of entertaining yourself withpout electricity
f) reduced small local jobs/food production/energy production/self management/distribution

Society has made us all put our eggs in one basket of commercial capitalism, and that refuses to listen to humanitarian stuff (unless it affects its marketing and profits)

Housing has been recently typified by VAST EXPLOITATION and the mis sold thatcherite dream of ua all becoming 'Landowners'

this is an illusion,

Houses are for people to live in.

Just as we were starting to get it right and have nearly decent housing for all (with differences which were being slowly ironed out)

Housing has become a commodity which everyone was encouraged to speculate with.

The population also agreed to sell off for a few pieces of silver.

Their means of supplying clean safe adequet water.
Their means of supplying adequet safe power
Their means of taking away damaging poo
Their means of all having a fairly equal right to health care is being taken aways and attacked
Their right to an equalised postal/communications service is also going to be removed.
The original rail service which could have provided means for transporting goods around the country for minimal carbon footprint was sold off and reduced (with government subsadies greater to the privatised rail system than to t British Rail)

Ha f**king ha ha ha ha

'the people' or 'the judas's;' as I though of them.

agreed to the selling of OF MY PUBLIC UTILITIES for princely sums such as a couple of hundred quid (It was made to look like the public wanted it by offereing them this amount if they brought a couple of shares in the PUBLICALLY OWNED UTILITIES (i.e. partly MINE)
Basically they were STOLEN from ME.
Because of some greedy selfish un publically minded little sh**s

All our predecessors built the utilities.......one generation sold them off.

Of course I havnt even mentioned council housing.

And this is why I have broadened it, to incorporate the other factors which accompanied a big factor in housing speculation.

Thatchers government decided to try to turn everyone into 'business people' by selling of everything that was publically/socially owned.

If enough people could not pay a water companys bills.........what would stop them from turning the water off?

I am sorry I always ramble but I am angry at what has been done to this countries strengths and assets and how apologists for 'wonderful market forces' seem to be oblivious to public building programs that have taken place and schemes for communal/social improvement on truly grand scales that you couldnt imagine now.

In the 80's when rates were 3 times what they are now it would cost the same in interest to borrow £40,000 as it would cost now to borrow £120,000. Obviously the repayment part of the mortgage is now greater due to the increased amount borrowed, but over the term of the mortgage the interest proportion is much less. Therefore people have more spending power as they can afford to borrow larger amounts and still meet the monthly repayments, thereby being able to offer more to the seller.

Effectively, the real value of the house is not what it's worth in cash when you buy it, but how much you are prepared or able to pay each month.

that, assuming you are a first time buyer, which I suspect lots of folks on here are, a massive crash could work in your favour as you might get to buy something at the bottom of the market, and if you time it right ride the next wave.

I inherited a deposit, we were paying getting on for 900 quid a month in rent, bought a house and are paying just over half that now. I wasn't going to spunk the deposit away on rent or a flashy car so I'm happy. If it all crashes and collapses then it will everywhere, so I'll just sell this place and buy another and carry on.

personally i think we are going to have a pretty flat market for the next ten years plus, allowing houses to drop in real terms but keeping their nominal values, so that no one freaks out and panics, but they gradually become more affordable (bringing them closer in line with long term averages).
it seems to me like the best solution, and it's kindof been proved that the governmnet has the power to steer house prices broadly in teh direction they want